Here's some thoughts on the reversion to mean system trades
- however please realize these are some quick comments and
the market is trading. I will re-write this tonight and the weekend
with more cohesive thoughts, but I wanted to get something out
there for now even if this isn't written as well as I would
like.
As you know yesterday I stated that I'm going to continue
to report the trades so we can track them and once they close out
we'll see where everything ends, however this is also an
unprecedented time. The reversion to mean trades will close
out on a bounce, but when and were the bounce will occur is
uncertain, a nice bounce could occur today, which I doubt being a
Friday, or maybe next Monday or Tuesday (turnaround Tuesday) the
FED could also come in anytime with some emergency cut etc.
SPX could be another 100 - 400 points lower before that
occurs, no one knows. That's why I said while I'll go ahead
and continue to report the trades - you guys have to decide what to
do here.
some options are to close some trades out for a loss, keep some
open, reduce risk. Or close out all. One can always look to
re-enter another day when things look washed out finally. If
the amount of capital you deployed to the trades is too much
relative to your account size then you might want to at least
consider reducing. If you these trades a only a small % of your
account then you have more ability to let them ride, or try to
hedge them
Unless you guys want me to just send a general sell out for
everything you can let me know? I think it's best that you
guys look at what you have and make your own decisions to either
reduce your size or not, or take some hedges, and I'll just
continue to report what these are doing.
One thing I'll do here is add the max draw down percentages for
each of these and these could be used as guides for general hard
stops- which by the way we have not hit yet. some of
these like the Trend/Pullback have 10 - 13% max draw down on the
first entry. Even the CCI trade is around 11% and that one only
recently entered so it has a long way off. So in short while
the Trend/Pullback system is probably getting close to that max
draw down, the QE BTS and CCI systems are still far away from their
historical max draw down past trades, which were just over 10%.
I mention the max draw down's because one option is to place a
stop just below the historical max draw down for each sub system.
None of these have been hit yet and like I stated above, the
CCI and QE BTS systems are far away from their max historical draw
downs
As you know these are reversion to mean systems , except for the
breakout sub system. The issue with reversion to mean systems is
that 99% of the time they work great. As you know the
reversion to mean systems are basically statistical trade types -
i.e. you find that markets tend to bounce 90 - 95% of the time
after a certain combination of indicators gets oversold etc, or
after the market has a correction of X % within a certain time, or
if price is down too many days in a row, or if price is up say too
many days in a row price for example if the SPX was up 10 days in a
row, it's due for at least a 1 day pullback. That's generally what
the reversion to mean systems are.
The concern I have at the moment is that we are seeing
unprecedented statistics with the market. For example the SPX
has fallen the fasted percentage wise over a 10 day period
than it ever has! That's clearly out of statistical bounds
here. The market's are not trading in normal statistical
range. So I've never been able to test moves like this
before.
In all my testing the reversion to mean system trades always did
better by not having a hard tradition stop where you would stop out
at lows, they always did better by getting out of bad trades on an
inevitable bounce. That said we could bounce any time or the market
could go anther 5, 10, 15% lower first. That's why I think
it's important to let you guys know that and decide how to manage
these trades - hold them like the system and exit when they do, or
reduce and hold some but reduce position or hedge, or close out.
I also think in the future we'll focus more on trying to develop
that 120 min system because with that you don't have multiple
entries and you have a stop. The worst that can happen is you stop
out a few times. Those type of systems have a lot of appeal
to me, and for you probably, because this is never fun. Also even
you veterans here who know all this and have been through it, it's
tough enough for you. However for new members who came here
recently - no matter how I try to explain this, times like this do
not look good
Posted by andrerozzo on 2nd of Mar 2020 at 09:40 am
besides, it was evident that we are in an outlier situation last
week. why not be honest and admit the system is not capable of
handling such a scenario and liquidate. instead all trades were
posted nonetheless.
now to state that the spy system should be abandoned for the
120 minutes: how does that feel for anyone taking a spy system
trade last week?
sure, these could still be profitable, but they could also
end up in a disaster.
i would like to hear a clear strategy from the pros at
breakpointtrades.
Posted by elementsix on 2nd of Mar 2020 at 10:12 am
Guys, Matt and Steve are constantly reiterating that we all need
to
trade within our means and risk tolerance... and
that we
don't need to take every trade. We also have
2 1/2 months for the positions to potentially turnaround or pair
losses.
In a waterfall move like we just saw I really think you should
also be
hedging options trades against sudden big
moves. I was mitigating my longer term risk buying low cost,
short-term (daily/weekly) OTM puts at the same time I was buying
the longer term call positions. I scalped some profits each day as
the market went down. Sure I'm net negative on the last few trades
but not by as much as you would think.
I'm not abandoning the system and using the 120 min in place of
it. You didn't listen. I even stated that in times like this, the
120 min system is very prone to false signals and whipsaws now in
an enviroment like this for a while. For example I expect the
market to be in a chop mode now, i.e. sharp ABC type of moves and
the risk there is the 120 min could trigger at the top of wave B's
where the market is then ready to pullback again. Trending systems
work better in trending environments. And on the flip side the
reversion to mean systems will likely work better in this type of
environment.
yes I talked about last week being an outlier but the trades are
not closed out, I'm not going to call them losing trades here until
they close out - I think there's a strong possibility that the 2nd
and 3rd entries will be winners on the Trend/Pullback and the 1st
and 2nd entries on the CCI and QE BTS will be winners. Unless the
market were to dump another 5 or 10% here, which anything is
possible. As I said I plan to let the trades go where they
may, close out then we'll reassess. Otherwise I have no plans
too stop the SPY systems, the only thing I said is that we will all
look at the trades after they close out and then see what changes
we can make etc. And as Steviebe294 just said - yes we can
also consider some flag like that - but I think that needs to be
made after the trades close out. Also some flag to suspend
trades could only apply to some systems but not globally - for
example I have systems like the bear long, bull exhaustion that
ONLY trigger on market melt downs - you can't flag those out
because they are meant to trigger in situations like this
Also for now the max historical draw downs have not been hit on
these - should these trades far exceed the max historical draw down
then we can say with certainty that these sub systems were out of
bounds, but for now we can't
I will be sending the max historical draw downs for you guys if
you wish to use those as stops, or you can stop out on your own if
your personal risk tolerance is met. and and remember your personal
risk profile is your own, which if you need to stop out do so. And
also no one should be trading a huge percentage of their total
accounts to any one system, if you have too much invested you might
need to consider trimming but that's a personal choice on your
own
another comment about the reversion to mean systems - another
option is to simply provide all the signals along with the
statistics such as the max historical draw down, then you have all
the data you need - you can do them or not and if you needed a hard
stop can place it just wider than the max historical draw downs.
on a side note - funny the RSI oversold sub system is probably
going long today. That sub system is covered over by the one chart
I have 8 systems on it, since others triggered first I do not send
trades for this one. However one option is to say: okay guys I have
20 sub systems - I'm simply going to tell let you know when any of
them take a trade, here's all the statistics and it's up to you to
manage your risk positions size, how many of them you do or
ignore
here's an image of all the long sub systems: currently we have
the 3 entries on Trend/Pullback, two entries on CCI and QE BTS.
However Bull exhaust is long as well (I don't send orders because
again it's covered up), and today the RSI oversold is going long,
bottom right, which again I don't send orders out. By the way the
max historical draw down on the RSI oversold is 5%.
I think one solution is for me to make a Google Spreadsheet like
I have with the DVT's and add the statistics to the table along
with max historical draw downs, that way you guys can quickly
reference them and know the general stats and the max 'heat' that
sub system took in the past.
The Trend/Pullback - has a max historical draw down of 11.5% on
the first entry, by the way the trade closed slightly positive by
the end, the date was Oct 1997
The QE BTS has a max historical draw down of 9.5%, was in Oct
2014 and that 1st entry still make 18% despite being down almost
10% at one point
the CCI had a max draw down of 16% on the first entry, 14% on
the 2nd, and 8% on the 3rd. However that was Oct 2008, moves like
that were the norm. Those trades ended up making 4%, 12%, and 21%
despite the intra trade draw downs. However that's also an
outlier as most other drawdowns are only a few %.
The bull exhaust 2 which is also long as I stated had a max
historical draw down 11% in Dec 2018 and the trade ended up making
8%
Matt - I love your systems and appreciate all the work you have
done to make them better. FWIW I personally like the idea of
knowing what each system is doing along with the general stats for
that system then I can make the decision of how much to add, buy,
sell etc. For example you may have one system long with another
short. In that scenario some people may want to just go flat and
wait for better clarity. Anyways, thanks again for all that
you do!
again read my post about max historical draw downs to some of
these sub systems - that's why even though clearly this wasn't fun,
these haven't exceeded those. That's why I can't come out and
say okay guys the systems are broken and this time is different?
Clearly those past trades went through some more extreme
times during those trades - of course these have not closed yet,
we'll see how they end up.
but I like my idea about making a table with all that data for
the systems
I started working on the table, the final format will be
different but here's some of what I'll show. will put it on
the website. Then when system trades occur you can simply
reference
Great matt, Having them at each entry level would be great if
possible?
I have analysed the spy system over 25 years and have draw down
statistics for each entry, but as the spy systems as a whole not
the individual systems at each entry level. Like entry 3 have a max
DD of 4.85%. Entry 4 about 2.85% max. I have planned my entry
capital allotment based on these DDs. Beware of es futures
trades on entries 1 and 2 as can get Margin calls on their large
DDs
the general stats like winning%, profit factor time in trade are
for all trades, but for the max draw down for now I may just show
the 1st entry for simplicity
Posted by retirefire on 2nd of Mar 2020 at 02:12 pm
THANKS MATT for all the WORK plus O.T. I'm sure most here
realize who pulls the trading trigger and owns the responsibility
for their trades. So even more LONG trades firing all the
more confirmation stick with systems.
Posted by tradeit007 on 2nd of Mar 2020 at 10:40 am
Matt, you provide an outstanding service. The velocity of this
move down is unprecedented - no "system" could have factored it in.
Real traders should not complain, IMO.
Posted by sonofrebel on 2nd of Mar 2020 at 10:04 am
Agree on keeping systems - you have fully shared stats with us -
it is our responsibility for the trades and the results. Data
included in TradeStation report for largest losing trade, e.g
trend/pullback was $440.22 but max intra-trade draw-down would be
helpful in understanding "max pain", at least in the past.
Interesting that they have not got to that point yet.
As others have said, excellent newsletter with review of past
sell offs - thanks.
I like sticking to the systems even if there are a few "tougher"
trades periods to deal with. The latest SPY trades still could be
profitable!
Also a though from the newsletter Sunday afternoon...... I like
idea of weekly SPY system if you go away from monthly. Many,
including myself, use Breakpoint Trades to help manage our 401k's.
We can't jump in and out of trades every few days, and can't
short the market / only trading the long side. The 2 hr
system is too short term to manage a "large company sponsored" 401k
(and for those of us that can't be watching all the time) but I
think the weekly system could be more nimble than monthly, but also
not produce so many trades to make it unworkable for managing our
401k's. I've been on the side lines of the market for a while and
have been waiting for a correction to get back into the market
which may be happening now..... Just my 1.5 cents on
the topic!
One trader’s perspective--I have been trading the SPY system,
and my feeling about the current situation is that even if these
trades result in a loss, over time that loss will be more than made
up because of the quality of the system, about that I have no
doubt. Also, I find that during this remarkable week, I have
not lacked any confidence at all that there will be profits.
It may take a while, and maybe not necessarily with this set
of trades, but I have that confidence nonetheless. I would
like to see the sell trades posted as the systems indicate.
Posted by elementsix on 28th of Feb 2020 at 04:45 pm
Couldn't agree more with 24kau. It's psychologically hard to
watch these reversion to mean trades on the way down but I
absolutely believe in the system. No system is perfect and this
could be an instance where it doesn't work 100% in
our favor. That being said, my positions have 77 days til
expiration and my BPT options positions
paired their total losses by almost 50% in
the last 15 mins of trading today. One even went
green. So stick with it everyone and a big thanks to Matt and
Steve!
ditto, the system is great and makes a profit 99% of time. What
is important is the trade size dedicated to entries 1 and 2. These
make the most entries and profit. But occasionally every
couple of years there are black swans (2 in 2018) and it is these
events that require risk management. AS STEVE and MATT have
constantly said, don't trade all of your acct in spy system.
I have allotted 10% of my spy acct to entry 1. 15% to entry 2. 20%
to entry 3. ETC because entries 3 to 5 far less
frequent (some only occur every few years) I will leave that
reserve $$ in the spy and use Matt's 120 min system to get out and
have that cash available for the black swan event at lower levels.
The draw downs for entry 4 and 5 are a lot less. Thanks Matt
for the great systems and please keep them going. It is the correct
allocation of trade size to entry 1 and 2 that matter in the long
run. And if is makes a loss once every ten years, it is more than
made up for by the 70% average annual gain by the appropriate
modest entry size for entry 1 and 2.
dammit! I had written a very detailed commentary on the
systems with my detailed thoughts and a plan - I spent the last hr
writing 2 pages, I probably hit save 20 times, and somehow it
didn't' save! My goal was to get this out to you about now a
couple hrs before the market closes so that you can make some
decisions especially since it's a Friday and the market may not act
well into the close ahead of the weekend. Now I don't have
the time to re-write it before the close. I'm sorry guys I'm gonna
have to re-write this on the weekend. Anyway at least you have some
of my initial commentary here from earlier
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Here's some thoughts on the reversion to mean system trades
Posted by matt on 28th of Feb 2020 at 09:49 am
Here's some thoughts on the reversion to mean system trades - however please realize these are some quick comments and the market is trading. I will re-write this tonight and the weekend with more cohesive thoughts, but I wanted to get something out there for now even if this isn't written as well as I would like.
As you know yesterday I stated that I'm going to continue to report the trades so we can track them and once they close out we'll see where everything ends, however this is also an unprecedented time. The reversion to mean trades will close out on a bounce, but when and were the bounce will occur is uncertain, a nice bounce could occur today, which I doubt being a Friday, or maybe next Monday or Tuesday (turnaround Tuesday) the FED could also come in anytime with some emergency cut etc. SPX could be another 100 - 400 points lower before that occurs, no one knows. That's why I said while I'll go ahead and continue to report the trades - you guys have to decide what to do here.
some options are to close some trades out for a loss, keep some open, reduce risk. Or close out all. One can always look to re-enter another day when things look washed out finally. If the amount of capital you deployed to the trades is too much relative to your account size then you might want to at least consider reducing. If you these trades a only a small % of your account then you have more ability to let them ride, or try to hedge them
Unless you guys want me to just send a general sell out for everything you can let me know? I think it's best that you guys look at what you have and make your own decisions to either reduce your size or not, or take some hedges, and I'll just continue to report what these are doing.
One thing I'll do here is add the max draw down percentages for each of these and these could be used as guides for general hard stops- which by the way we have not hit yet. some of these like the Trend/Pullback have 10 - 13% max draw down on the first entry. Even the CCI trade is around 11% and that one only recently entered so it has a long way off. So in short while the Trend/Pullback system is probably getting close to that max draw down, the QE BTS and CCI systems are still far away from their historical max draw down past trades, which were just over 10%. I mention the max draw down's because one option is to place a stop just below the historical max draw down for each sub system. None of these have been hit yet and like I stated above, the CCI and QE BTS systems are far away from their max historical draw downs
As you know these are reversion to mean systems , except for the breakout sub system. The issue with reversion to mean systems is that 99% of the time they work great. As you know the reversion to mean systems are basically statistical trade types - i.e. you find that markets tend to bounce 90 - 95% of the time after a certain combination of indicators gets oversold etc, or after the market has a correction of X % within a certain time, or if price is down too many days in a row, or if price is up say too many days in a row price for example if the SPX was up 10 days in a row, it's due for at least a 1 day pullback. That's generally what the reversion to mean systems are.
The concern I have at the moment is that we are seeing unprecedented statistics with the market. For example the SPX has fallen the fasted percentage wise over a 10 day period than it ever has! That's clearly out of statistical bounds here. The market's are not trading in normal statistical range. So I've never been able to test moves like this before.
In all my testing the reversion to mean system trades always did better by not having a hard tradition stop where you would stop out at lows, they always did better by getting out of bad trades on an inevitable bounce. That said we could bounce any time or the market could go anther 5, 10, 15% lower first. That's why I think it's important to let you guys know that and decide how to manage these trades - hold them like the system and exit when they do, or reduce and hold some but reduce position or hedge, or close out.
I also think in the future we'll focus more on trying to develop that 120 min system because with that you don't have multiple entries and you have a stop. The worst that can happen is you stop out a few times. Those type of systems have a lot of appeal to me, and for you probably, because this is never fun. Also even you veterans here who know all this and have been through it, it's tough enough for you. However for new members who came here recently - no matter how I try to explain this, times like this do not look good
if you have no risk
Posted by andrerozzo on 2nd of Mar 2020 at 09:20 am
if you have no risk management in place for outlier events/outlier periods, then it i don't think it is something that should be sold.
besides, it was evident that
Posted by andrerozzo on 2nd of Mar 2020 at 09:40 am
besides, it was evident that we are in an outlier situation last week. why not be honest and admit the system is not capable of handling such a scenario and liquidate. instead all trades were posted nonetheless.
now to state that the spy system should be abandoned for the 120 minutes: how does that feel for anyone taking a spy system trade last week?
sure, these could still be profitable, but they could also end up in a disaster.
i would like to hear a clear strategy from the pros at breakpointtrades.
Guys, Matt and Steve are
Posted by elementsix on 2nd of Mar 2020 at 10:12 am
Guys, Matt and Steve are constantly reiterating that we all need to trade within our means and risk tolerance... and that we don't need to take every trade. We also have 2 1/2 months for the positions to potentially turnaround or pair losses.
In a waterfall move like we just saw I really think you should also be hedging options trades against sudden big moves. I was mitigating my longer term risk buying low cost, short-term (daily/weekly) OTM puts at the same time I was buying the longer term call positions. I scalped some profits each day as the market went down. Sure I'm net negative on the last few trades but not by as much as you would think.
Exactly
Posted by racerick on 2nd of Mar 2020 at 04:06 pm
Exactly
I'm not abandoning the system
Posted by matt on 2nd of Mar 2020 at 09:52 am
I'm not abandoning the system and using the 120 min in place of it. You didn't listen. I even stated that in times like this, the 120 min system is very prone to false signals and whipsaws now in an enviroment like this for a while. For example I expect the market to be in a chop mode now, i.e. sharp ABC type of moves and the risk there is the 120 min could trigger at the top of wave B's where the market is then ready to pullback again. Trending systems work better in trending environments. And on the flip side the reversion to mean systems will likely work better in this type of environment.
yes I talked about last week being an outlier but the trades are not closed out, I'm not going to call them losing trades here until they close out - I think there's a strong possibility that the 2nd and 3rd entries will be winners on the Trend/Pullback and the 1st and 2nd entries on the CCI and QE BTS will be winners. Unless the market were to dump another 5 or 10% here, which anything is possible. As I said I plan to let the trades go where they may, close out then we'll reassess. Otherwise I have no plans too stop the SPY systems, the only thing I said is that we will all look at the trades after they close out and then see what changes we can make etc. And as Steviebe294 just said - yes we can also consider some flag like that - but I think that needs to be made after the trades close out. Also some flag to suspend trades could only apply to some systems but not globally - for example I have systems like the bear long, bull exhaustion that ONLY trigger on market melt downs - you can't flag those out because they are meant to trigger in situations like this
Also for now the max historical draw downs have not been hit on these - should these trades far exceed the max historical draw down then we can say with certainty that these sub systems were out of bounds, but for now we can't
I will be sending the max historical draw downs for you guys if you wish to use those as stops, or you can stop out on your own if your personal risk tolerance is met. and and remember your personal risk profile is your own, which if you need to stop out do so. And also no one should be trading a huge percentage of their total accounts to any one system, if you have too much invested you might need to consider trimming but that's a personal choice on your own
another comment about the reversion
Posted by matt on 2nd of Mar 2020 at 02:04 pm
another comment about the reversion to mean systems - another option is to simply provide all the signals along with the statistics such as the max historical draw down, then you have all the data you need - you can do them or not and if you needed a hard stop can place it just wider than the max historical draw downs.
on a side note - funny the RSI oversold sub system is probably going long today. That sub system is covered over by the one chart I have 8 systems on it, since others triggered first I do not send trades for this one. However one option is to say: okay guys I have 20 sub systems - I'm simply going to tell let you know when any of them take a trade, here's all the statistics and it's up to you to manage your risk positions size, how many of them you do or ignore
here's an image of all the long sub systems: currently we have the 3 entries on Trend/Pullback, two entries on CCI and QE BTS. However Bull exhaust is long as well (I don't send orders because again it's covered up), and today the RSI oversold is going long, bottom right, which again I don't send orders out. By the way the max historical draw down on the RSI oversold is 5%.
I think one solution is for me to make a Google Spreadsheet like I have with the DVT's and add the statistics to the table along with max historical draw downs, that way you guys can quickly reference them and know the general stats and the max 'heat' that sub system took in the past.
The Trend/Pullback - has a max historical draw down of 11.5% on the first entry, by the way the trade closed slightly positive by the end, the date was Oct 1997
The QE BTS has a max historical draw down of 9.5%, was in Oct 2014 and that 1st entry still make 18% despite being down almost 10% at one point
the CCI had a max draw down of 16% on the first entry, 14% on the 2nd, and 8% on the 3rd. However that was Oct 2008, moves like that were the norm. Those trades ended up making 4%, 12%, and 21% despite the intra trade draw downs. However that's also an outlier as most other drawdowns are only a few %.
The bull exhaust 2 which is also long as I stated had a max historical draw down 11% in Dec 2018 and the trade ended up making 8%
Matt - I love your
Posted by chadtech on 2nd of Mar 2020 at 03:43 pm
Matt - I love your systems and appreciate all the work you have done to make them better. FWIW I personally like the idea of knowing what each system is doing along with the general stats for that system then I can make the decision of how much to add, buy, sell etc. For example you may have one system long with another short. In that scenario some people may want to just go flat and wait for better clarity. Anyways, thanks again for all that you do!
again read my post about
Posted by matt on 2nd of Mar 2020 at 02:07 pm
again read my post about max historical draw downs to some of these sub systems - that's why even though clearly this wasn't fun, these haven't exceeded those. That's why I can't come out and say okay guys the systems are broken and this time is different? Clearly those past trades went through some more extreme times during those trades - of course these have not closed yet, we'll see how they end up.
but I like my idea about making a table with all that data for the systems
I started working on the
Posted by matt on 2nd of Mar 2020 at 03:13 pm
I started working on the table, the final format will be different but here's some of what I'll show. will put it on the website. Then when system trades occur you can simply reference
Great matt, Having them at
Posted by elliotw on 2nd of Mar 2020 at 04:11 pm
Great matt, Having them at each entry level would be great if possible?
I have analysed the spy system over 25 years and have draw down statistics for each entry, but as the spy systems as a whole not the individual systems at each entry level. Like entry 3 have a max DD of 4.85%. Entry 4 about 2.85% max. I have planned my entry capital allotment based on these DDs. Beware of es futures trades on entries 1 and 2 as can get Margin calls on their large DDs
Matt that looks great --
Posted by puma on 2nd of Mar 2020 at 03:30 pm
Matt that looks great -- are those stats for all entries combined for each trade type?
the general stats like winning%,
Posted by matt on 2nd of Mar 2020 at 03:31 pm
the general stats like winning%, profit factor time in trade are for all trades, but for the max draw down for now I may just show the 1st entry for simplicity
THANKS MATT for all the
Posted by retirefire on 2nd of Mar 2020 at 02:12 pm
THANKS MATT for all the WORK plus O.T. I'm sure most here realize who pulls the trading trigger and owns the responsibility for their trades. So even more LONG trades firing all the more confirmation stick with systems.
Matt you have the patience
Posted by iaranger on 2nd of Mar 2020 at 11:11 am
Matt you have the patience of a Saint
Matt, you provide an outstanding
Posted by tradeit007 on 2nd of Mar 2020 at 10:40 am
Matt, you provide an outstanding service. The velocity of this move down is unprecedented - no "system" could have factored it in. Real traders should not complain, IMO.
Agree on keeping systems -
Posted by sonofrebel on 2nd of Mar 2020 at 10:04 am
Agree on keeping systems - you have fully shared stats with us - it is our responsibility for the trades and the results. Data included in TradeStation report for largest losing trade, e.g trend/pullback was $440.22 but max intra-trade draw-down would be helpful in understanding "max pain", at least in the past. Interesting that they have not got to that point yet.
As others have said, excellent newsletter with review of past sell offs - thanks.
I made that point last
Posted by stevieb294 on 2nd of Mar 2020 at 09:48 am
I made that point last week. Perhaps there are some situations where "trading suspended" flag goes up.
I like sticking to the
Posted by blayden on 1st of Mar 2020 at 10:16 pm
I like sticking to the systems even if there are a few "tougher" trades periods to deal with. The latest SPY trades still could be profitable!
Also a though from the newsletter Sunday afternoon...... I like idea of weekly SPY system if you go away from monthly. Many, including myself, use Breakpoint Trades to help manage our 401k's. We can't jump in and out of trades every few days, and can't short the market / only trading the long side. The 2 hr system is too short term to manage a "large company sponsored" 401k (and for those of us that can't be watching all the time) but I think the weekly system could be more nimble than monthly, but also not produce so many trades to make it unworkable for managing our 401k's. I've been on the side lines of the market for a while and have been waiting for a correction to get back into the market which may be happening now..... Just my 1.5 cents on the topic!
Thanks for all you guys do!
I'm a big fan of
Posted by loujjj on 1st of Mar 2020 at 10:03 pm
I'm a big fan of 120 minute system , The other systems are out of my comfort zone
One trader’s perspective--I have been
Posted by 24kau on 28th of Feb 2020 at 04:13 pm
One trader’s perspective--I have been trading the SPY system, and my feeling about the current situation is that even if these trades result in a loss, over time that loss will be more than made up because of the quality of the system, about that I have no doubt. Also, I find that during this remarkable week, I have not lacked any confidence at all that there will be profits. It may take a while, and maybe not necessarily with this set of trades, but I have that confidence nonetheless. I would like to see the sell trades posted as the systems indicate.
YES to this comment
Posted by mundy on 1st of Mar 2020 at 09:48 pm
YES to this comment
Couldn't agree more with 24kau.
Posted by elementsix on 28th of Feb 2020 at 04:45 pm
Couldn't agree more with 24kau. It's psychologically hard to watch these reversion to mean trades on the way down but I absolutely believe in the system. No system is perfect and this could be an instance where it doesn't work 100% in our favor. That being said, my positions have 77 days til expiration and my BPT options positions paired their total losses by almost 50% in the last 15 mins of trading today. One even went green . So stick with it everyone and a big thanks to Matt and Steve!
ditto, the system is great
Posted by elliotw on 28th of Feb 2020 at 04:59 pm
ditto, the system is great and makes a profit 99% of time. What is important is the trade size dedicated to entries 1 and 2. These make the most entries and profit. But occasionally every couple of years there are black swans (2 in 2018) and it is these events that require risk management. AS STEVE and MATT have constantly said, don't trade all of your acct in spy system. I have allotted 10% of my spy acct to entry 1. 15% to entry 2. 20% to entry 3. ETC because entries 3 to 5 far less frequent (some only occur every few years) I will leave that reserve $$ in the spy and use Matt's 120 min system to get out and have that cash available for the black swan event at lower levels. The draw downs for entry 4 and 5 are a lot less. Thanks Matt for the great systems and please keep them going. It is the correct allocation of trade size to entry 1 and 2 that matter in the long run. And if is makes a loss once every ten years, it is more than made up for by the 70% average annual gain by the appropriate modest entry size for entry 1 and 2.
I agree. Please keep posting
Posted by tleahy on 28th of Feb 2020 at 04:16 pm
I agree. Please keep posting the trades.
dammit! I had written a
Posted by matt on 28th of Feb 2020 at 01:56 pm
dammit! I had written a very detailed commentary on the systems with my detailed thoughts and a plan - I spent the last hr writing 2 pages, I probably hit save 20 times, and somehow it didn't' save! My goal was to get this out to you about now a couple hrs before the market closes so that you can make some decisions especially since it's a Friday and the market may not act well into the close ahead of the weekend. Now I don't have the time to re-write it before the close. I'm sorry guys I'm gonna have to re-write this on the weekend. Anyway at least you have some of my initial commentary here from earlier